A case study on competition in the bottled water industry in 2006
A Case Study On Competition in theBottled Water Industry in 2006Presented To:- Prepared By :-Prof. K.S. Prasad Anand Katkiyajadav(11F05) Jayesh Sonagara (11F18) Parth Trivedi (11M25) G.H. Patel Post Graduate Institute of Business Management, Sardar Patel University, Vallabh Vidhyanagar
Introduction of Bottled Water Industry :- Water is the most important necessity for life. The drinking-water needs forindividuals vary depending on the climate, physical activity and the body culture.but for average consumers it is estimated to be about two to four litres per day.The growing number of cases of water borne diseases, increasing water pollution,increasing urbanization, increasing scarcity of pure and safe water etc. have madethe bottled water business just like other consumer items. Scarcity of potable andwholesome water at railway stations, tourists spots, and role of tourism corp. Etc. Indians currently spending about $330m a year on bottled water, analystsestimate. The packaged water market constitutes 15 per cent of the overallpackaged beverage industry, which has annual sales of at least $2.6bn.Almost all the major international and national brands water bottles are available inIndian market right from the malls to railway stations, bus stations, grocery storesand even at panwalas shop. Before few years bottle water. was considered as therich peoples choice, but now it is penetrated even in rural areas. The growth andstatus of Indian Bottled Industry in comparison with Western or Asian market,India is far behind in terms of quantum, infrastructure, professionalism andstandards implementation. The per capita consumption of mineral water in India isa mere 0.5-liter compared to 111 liter in Europe and 45-liter in USA. Also As perUN study conducted in 122 countries, in connection with water quality, Indiasnumber was dismal 120. In comparison to global standards Indias bottled watersegment is largely unregulated. The bottled water category is growing at a rapid pace. The branded`market is40 % of the category and non- branded contributes to 60% of the market. Thecategory is growing at a rate of 30%. Bisleri is the market leader in mineral waterin India with a 60% market share within organized mineral water category. Threekey players mainly dominate the Indian Bottled Water Market Parle Bisleri, CocaCola India Inc Kinley and Pepsico India Holdings Pvt. Limited. This market isexpected to grow at a 30% rate in the next 7 years. In 2010 the revenue generatedby this market was over $250 million. The overall packaged bottled water in India is estimated to touch the Rs10,000 croremark in the 2012-13 fiscal, growing at a compound annual growth rate(CAGR) of 19%, says a new report by IkonMarketing Consultants. Presently, thismarket is estimated at Rs 8,000 crore, and could touch Rs15,000 crore by 2015, the
report adds. While Bisleri continues as the top brand with a 36% share amongnational players, Coca-Colas Kinley follows with 25% share, followed byAquafina at 15%. Other smaller brands include Parle Agros Bailley, Kingfisherand McDowells No. 1, according to the report. The global bottled water market,which saw an increase of 40-45% over the past five years, is currently valued atclose to US$ 85-90 billion, the report adds.Q-1 Analyse the factor of Bottled Water industry or sector for its survivability. Millions of people, both in rural and urban India, suffer from inadequate orno tap water supply. Even some parts of Mumbai, the countrys financialcapital, get a mere two hours of daily water supply. The citys Virar suburb gets 45minutes. So bottled water is much in demand by residents - even though thebusinesses profiting from the sales are thriving from access to public watersources. The bottled water industry has spent billions over the past decade to sell youon the idea that bottled water is better than tap water. Well the short answer is theyare both unhealthy. One of the most ironic parts of the bottled water tragedy is thatthe water bottling industry gets the water free, filters it, bottles it and sells it backto us at 1,900% profit. The ironic part is that tap water is legislated to be 7.0 pHneutral. They first dump a TON of cholrine in the water to kill off all the badbacteria, this makes it highly acidic.Factor for survivability bottled water industry are:- Higher disposable income Increased preference for hygiene Improved affordability Easier availability of packaged drinking water Shortage of safe drinking water Awareness Purity factor
Q-2 Analyse the competitive advantage the organization has with respect ofthe any of the sources.For analyse the competitive advantage we analyse Mount Everest Mineral Water: Himalayan natural mineral water‟s simple, yet striking bottle design was acreation of Re diffusion DY&R, and has been actualized by SIPA, Italy. Thissimple packaging also strengthened the positioning by conveying a messagethrough a message on the package‟s label itself. Even the television commercials that were used strengthened the samepositioning with the statement in the ad using the statement: “ Go Back to thenature with untouched, unprocessed pristine water from the Himalayas that took 20years gathering nature‟s goodness for you. Himalayan Natural mineral water.” Thead ends with the new bottle design being displayed along with the slogan “LiveNatural” and the name of TATA appearing at the bottom saying “A TATAproduct”. Strength of Himalayan is the brand name. Himalayan offers instant imageryof the Himalayas and brings in the visuals of Cool, Pure, Indian and Naturalimagery. This message is strengthened through the statement on the label: -“I spentmy youth never questioning destiny that led me from the top of the Sivalik range ofthe foothills of the Himalayas. Nor the decades I spent gathering the naturalgoodness of minerals like sodium, calcium and potassium. Where I come from,destiny is a good thing. And now that yours has led you to me, don‟t hesitate todrink up.” Differentiation was done using the bottle design and visual design todifferentiate using the label color and graphics and the pink color being used on thelabel was the most appealing to the prospects of the brand that attracted theprospects a lot. The USP of Himalayan Natural water is that it is naturally pure andhas a distinct taste derived from the source of origin. The Companys strategic intent is to ride on this growing opportunity with athreepronged strategic platform.1) Going beyond safety into health with fortified water whichis aligned to theneeds of the populace through cutting - edge science.2) Sustaining /improving the current price equilibrium, by offering a price lowerthan competition and ata psychological price point advantage through innovative
and convenient packaging3)Building product trust through the Tata Branding.Q-3 What were the different strategies adopted by the organisatin in three tofive years.For analyse different strategies adopted by the organisatin we analyse Parle BisleriLtd company‟s strategies:- The Indian bottled water category is led by Parle Bisleri Ltd, which held a43% off-trade volume share in 2011. It was followed by PepsiCo India Holdings(15%) and Coca-Cola India (11%). Bisleri, Aquafina and Kinley (Parle Bisleri Ltd,PepsiCo India Holdings and Coca-Cola India respectively) are the dominantbrands, accounting for a 69% off-trade volume share in 2011. Bisleri led sales in2011 due to its strong distribution network and strong brand image. In 2011 ParleBisleri launched Bisleri hubs to drive consumption, with local stationery shops anddairies exclusively selling the Bisleri brand. Bisleri differentiates by it breakaway seal as an assurance of purity. Marketresearch conducted by Bisleri revealed that the overriding concern for set of buyersis the tampering of the seal and the reuse of bottles. Many have witnessed usedbottles being refilled at railway stations. So when a consumer buys mineral water,he would like to be assured that the water has not been tampered with. Bisleri is promoted by an aggressive print-and-TV backed by hoardings andpoint-of-sale material. Every interface with the consumer is being used as anopportunity to reinforce the message. For instance, all vehicles used for supplyhave been painted in bright blue, bear the Bisleri logo and sport catchy baselineslike „drink and drive‟. Apart from creating consumer pull with an advertising campaign bisleri isboosting their tail pus has well. Distribution is the key. The consumer will pick upwhatever inconveniently available and is pushed by the retailerSchemes: One Litre: One Box free on 5 Box. Half Litre: One Bottle free on 1 Box. Bisleri plans to take its mountain water brands international, to Europe,America and West Asia. It has not yet started exporting because it is still workingon getting the packaging right, looking for innovative, light-weight and sturdypackaging material.
In August 2000, Coca Cola saw potential in bottled water industry andentered this market by introducing its brand Kinley. The market saw entry of bigplayer‟s like Pepsi through its brand Aquafina and Nestle through its brand PureLife. The other players in the market include the Tatas through its brand Himalaya,Manikchand through brand Oxyrich and Parle Agro through its brand Bailey. Theorganized bottled water segment which was initially dominated by Parle Bislerisaw entry of many players. Currently there are about 8-10 players in the organizedsector. In the response to the growing competition Bisleri started using hybridstrategy. According to this strategy differentiation was based on quality; howeverwith number of competitors the differentiation based on quality became difficult.Bisleri has now used differentiation in the form of packaging, price anddistribution. The company differentiates through distribution by targeting newchannels like chemists and stationery shops which were not used earlier. Thecompany has used its own fleet of about 2000 trucks to manage the distributionnetwork (Iyer, 2010). The company differentiated in the terms of packaging by making availablethe products in different shapes and size. The company has used tamper proof sealto assure good quality. The company has patented the tamper proof seal technologyand has created barriers for its competitors. The packaged water industry hasbifurcated in two segments, retail and bulk water segment. The company has inresponse to entry of new players have used refocusing strategy. The presentstrategy of Bisleri involves targeting the bulk water segment, pricingcompetitively, strengthen distribution, and innovate on packaging and product lineextension. The company by passes the competition and reduces operational cost bytargeting the bulk bottled water segment. The company has shown innovation inpackaging by changing the shape and color of pack from blue to aqua green. Thecompany operates in hyper competitive environment, so it is necessary thatcompany changes its strategies according to the dynamic environment. We havefound that the company can be located on position 3 on the strategic clock.However, the company can switch between hybrid and differentiation strategy inaccordance with changing environment. The company however presently useshybrid strategy where in it has differentiated its offering from its competitive andat the same time making it available at cost lower than its competitors.